Friday, June 19, 1998

Texas Instruments to eliminate 3,500 jobs, citing weak semiconductor market

By KATIE FAIRBANK / AP Business Writer

DALLAS (AP) -- Texas Instruments is eliminating 3,500 jobs worldwide due to the weak semiconductor market, which has been battered by lower prices from Asian competitors and reduced demand for computer memory chips.

Texas Instruments said Thursday the jobs would be cut as part of a broad restructuring that includes the sale of its memory chip business to Micron Technology for a combination of Micron stock and debt totaling approximately $800 million.

TI said the jobs -- about 8 percent of its payroll -- would be pared through layoffs as well as attrition. It did not say how many would be trimmed in the United States.

The company expects the layoffs to be implemented within the next few months, ultimately saving TI about $270 million a year. TI said it would be selling the memory business at a loss.

Over the past several years, TI has divested 12 businesses and concentrated on semiconductors -- computer chips that help run everything from pagers and electronic devices to cars.

Prices for semiconductors have fallen sharply in the past year.

Asian competitors, particularly from South Korea, have been sharply cutting prices to weather the economic damage in their countries, stealing business from TI, Motorola and others.

The Asian economic problems also have led to reduced demand throughout the region and personal computer sales overall have been slower than expected.

The average unit prices for the memory chips, called DRAMs, dropped 60 percent from the first quarter of 1997 to the first quarter of 1998, resulting in a loss to TI's memory operations that was more than double the previous year.

"The memory chip prices are down, partly because hard disk manufacturers and cell phone makers are seeing slowdowns," Wendy Abramowitz, an analyst for Argus Research Corp. in New York. "Cutting plants is an effective way to keep production steady but reduce the cost."

The news was announced after the stock market closed. By the end of trading Thursday on the New York Stock Exchange, TI stock had risen more than 7 percent to close up $3.62-1/2 at $54.50 per share.

TI's economic woes have been building for several years and the company reported sharply lower first-quarter earnings in April. At the time, the company said the Asian crisis and inventory reductions were hurting its semiconductor business and that the overall semiconductor market would grow by 5 percent or less this year.

The company warned that semiconductor profits would be pressured by lower prices and the weakness in Asia.

Micron, based in Boise, Idaho, also reported a loss in the third quarter, attributed partially to the low selling price for semiconductor memory chips.

Micron will be getting facilities in Italy, Singapore and Richardson, Texas, through the sale.

TI will close a second Richardson operation, and Micron will get the building.